Interactive Investor

Your vote counts: WH Smith given bloody nose by angry investors

21st January 2022 08:55

Graeme Evans from interactive investor

There are few topics more likely to get shareholders’ backs up than boardroom pay as WH Smith just found out. These companies could also be in the firing line in the days ahead.

WH Smith (LSE:SMWH) shareholders have delivered the first big AGM rebellion of 2022 after their protest at the £550,000 bonus paid to chief executive Carl Cowling in a year of government support.

Wednesday's advisory vote on the remuneration report only received 54% backing, the second year in a row the retailer has been in the firing line after criticism of Cowling's pay rise in 2020. WH Smith's pay committee chair will now consult with shareholders following this week's vote.

As we report below, FTSE All-Share stocks Avon Protection (LSE:AVON) and Hollywood Bowl Group (LSE:BOWL) will be hoping to avoid a repeat of last year's dissent when they hold their AGMs next week. FTSE 250 Britvic (LSE:BVIC) is holding its annual meeting next week.


When: 11am, Thursday 27 January

Where: Linklaters LLP, One Silk Street, London EC2Y 8HQ

How to participate: Proxy voting forms need to be returned by 11am on Tuesday 25 January. Shareholders who are unable to attend may submit a question to the directors by emailing More details on the AGM can be found here.

Who's in the chair? Former BAT executive director John Daly, who has been Britvic chairman since September 2017.

How did the company do in the year to 30 September? The Robinsons, Tango and J2O maker reported revenues of £1.4 billion, broadly flat at actual exchange rates. Adjusted earnings per share (EPS) rose 2.5% to 44.3p, while record free cash flow generation of £132.7 million enabled a £31.9 million reduction in debt. A final dividend of 17.7p a share is due to be paid on 2 February, taking the total for the year to 24.2p.

How did shares perform in the year? Up 9.6% to 893.5p (914p on Thursday).

How much is the boss paid? Simon Litherland, chief executive since 2013, has received a 2.5% increase taking his basic salary for 2022 to £675,533. His single figure remuneration for the 2020/21 financial year came to £2.29 million, lifted by an annual bonus of £778,100 and the vesting of long-term incentives worth £678,000.

How has the company used discretion on long-term incentives? The pay committee considered early in the financial year that compound annual growth targets would not be met due to the pandemic. It took into account several “gateway” conditions before deciding that shares linked to the EPS measure should vest at 33.3% of maximum to reflect the strong performance prior to the disruption. The committee said the business has delivered shareholder value over the last three years and had a strong platform for future growth.

What's the view of voting agencies? Glass Lewis believes the adjustment to the long-term incentive plan is proportionate. It recommends support for the remuneration report and the binding vote on the new three-year remuneration policy.

What changes are being made to the remuneration policy? Share options are being replaced by awards under the Performance Share Plan. The maximum bonus opportunity for executive directors will be increased to 150% of basic salary, with one-third of any bonus earned being deferred into shares for two years. The maximum bonus that will apply specifically for Litherland will be increased to 175% of basic salary.

How did last year's AGM go? The remuneration report was supported with 99.5% of votes and the remuneration policy got 96.3%. More than 20% of votes were against the re-election of William Eccleshare and Ian McHoul due to concerns about time commitment. Britvic described them as “highly-active” directors whose attendance record was not less than 100%.

How is the company doing on diversity targets? The percentage of women on the board is above the 33% recommended under the Hampton-Alexander review. The company's 2025 goals include to increase black, Asian and minority ethnic leadership to 10% from 2020's 3%.

Hollywood Bowl

When: 9.30am, Friday 28 January

Where: Investec Bank, 30 Gresham Street, London EC2V 7QP

How to participate: Shareholders who plan to attend the AGM or wish to ask a question are asked to email by Wednesday 26 January. The same date applies to the return of proxy voting forms. More details on the AGM can be found here.

Who's in the chair? Peter Boddy, who has led several private equity-backed leisure sector companies including Fitness First UK, Megabowl and Maxinutrition.

How did the company do in the year to 30 September? Pent-up demand led to record revenues of £20.1 million in August and positive cash generation across all months in the period since the re-opening of its bowling and mini golf sites in May. It finished the year with cash of £29.9 million and well-placed to capitalise on opportunities, but no dividend was declared.

How did shares perform in the year? Up 79.6% to 242.5p (272p on Thursday).

How much is the boss paid? Stephen Burns, who became chief executive in 2014, has been awarded a 5% pay rise for 2022 to £412,335. He did not receive a bonus in the financial year.

What happened at last year's AGM? There was a sizeable protest, with 47.7% of votes against the remuneration report. This followed the company's use of discretion to allow a three-year long-term incentive award from February 2018 to vest for a pro-rated period.

How has the company responded to the dissent? No discretion has been applied to this year's long-term award, which lapsed due to earnings being below target. It also brought forward by a year the normal three-yearly review of its remuneration policy, with new metrics now more aligned with strategy but still majority weighted towards key performance indicators. The changes will be put to a binding vote of shareholders at the AGM.

What's the view of voting agencies? Glass Lewis has recommended voting in favour of the remuneration report and the updated remuneration policy. It is satisfied with the company's response to last year's protest vote and said that pay appears to be aligned with the overall shareholder experience. However, it is concerned that board composition does not meet the requirement of the corporate code for at least half of directors excluding the chair to be independent. For this reason it has recommended voting against the re-appointment of chief people officer Melanie Dickinson, who joined the board in October.

How is the company doing on diversity targets? There are two women on the seven-strong board, below the 33% recommended by the Hampton-Alexander review. However, the company is not bound by this target as it is outside the FTSE 350 index.

Avon Protection

When: 10.30am, Friday 28 January

Where: Hampton Park West facility, Semington Road, Melksham, Wiltshire, SN12 6NB

How to participate: Proxy voting instructions must be returned by 10.30am, 26 January. Due to the Omicron variant, shareholders are requested not to attend the meeting in person and instead to join via webcast. The notice of AGM is on page 169 of the annual report.

Who's in the chair? Bruce Thompson, the former chief executive of FTSE 250-listed Diploma, who joined the board in 2020.

How did the company do in the year to 30 September? The respiratory and head protection business increased revenues by 16.2% to $248.3 million (£181.4 million), including a first contribution of $41 million (£30 million) from Team Wendy. However, impairments from plans to wind down its body and flat armour business left adjusted earnings per share 38.5% lower at 60.6 cents. A final dividend of 30.6 cents for payment on 11 March is up 30%, resulting in total dividends for the year of 44.9 cents, also up 30%.

How did shares perform in the year? Down 54% to 1,942p (1,078p on Thursday).

How much is the boss paid? Paul McDonald, chief executive since 2017, received total remuneration of just over £1 million compared with £1.7 million the year before. His 2021 figure included £428,000 from the long-term incentive plan. In line with rises for the wider workforce, McDonald's salary for this year has increased by 2.75% to £513,750.

What happened at last year's AGM? The remuneration report received 23.7% votes against, which Avon said partly reflected concerns about salary increases for executive directors, including a 22% pay rise for McDonald. Shareholders also raised an issue around the timing of changes to pension contribution rates.

What's the view of voting agencies? Glass Lewis believes shareholders can be satisfied with the company's efforts to address last year's AGM dissent. It has recommended support for the annual remuneration report.

How is the company doing on diversity targets? The company has achieved the target set by the Hampton-Alexander review of 33% female representation. 

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